by Keith Hamburger

Created on: June 18, 2008   Last Updated: August 17, 2008

Recently there were two stories that tell us a powerful economics lesson that has been ignored almost everywhere. On Thursday, June 12, 2008, the headlines throughout the country read "Retail sales at six month high" and credited the president's economic stimulus program for boosting the economy, just as he claimed it would. The very next day, Friday, June 13, the headlines read "Inflation at six month high" and blamed rising energy costs on the increase.

These claims ignore basic economics lessons taught by the Chicago and Austrian schools of economics. A basic tenet of both schools is that inflation is, first and foremost, a monetary issue. Inflation is an increase in the money supply by governments and central banks. The rise in prices is a symptom of such an increase and is not inflation in itself.

These two headlines show this effect clearly. Our government has created money out of thin air in the form of the "economic stimulus package" and prices have risen. Unfortunately, the Keynesian economists in the media and government can't understand this and still try to blame external forces for rises in prices.

Until we can get rid of the Keynesian idea, that has many times been refuted, that the government can spend money that it doesn't have to help the economy, we will be forever subjected to the extreme boom and bust cycles that the Federal Reserve System was supposedly created to end. By attempting to control the economy, however, central banking has only made what were previously regional concerns into international crises.

One candidate in the 2008 election cycle, Ron Paul, was willing to speak truth to this issue. Marginalized by media dependent on government sources for the majority of their news, Dr. Paul was ridiculed for pointing out what a simple reading of headlines and basic understanding of economics makes obvious.

The mainstream media, eschewing their responsibilities for journalistic integrity and investigation, have capitulated to government power in reporting these issues. Rather than studying economics and verifying the truth of their reporting, they have become reliant upon government press releases for the majority of their reporting. Passing on government propaganda, statements designed to justify and validate government action and growth, as real news.

It is time to take a stand and speak the truth of what our government is doing to us. As for me, my "rebate" is sitting in my bank account. I'm not going out to buy anything special. Hopefully it will manage to somewhat offset the inflationary effects of the rebate itself.

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